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Dell Corporations Ltd purchased a Patent Right for $ 1000. It has been assessed that the useful life However, another Group company intends to buy
- Dell Corporations Ltd purchased a Patent Right for $ 1000. It has been assessed that the useful life However, another Group company intends to buy the patent after 5 years for 60% of the purchase price. Dell Corporations Ltd also intends to sell it after 5years. There exists an active market for a similar patent. Dell Corporations Ltd wishes to adopt revaluation model. It has observed that fair market value of the patent at the end of Year 1 is $ 500. Suppose the use value of the asset under IAS 38 is $ 560. (5 Marks)
- At what cost should Dell Corporations Ltd recognize the patent initially?
- If the entity adopts revaluation model, does it need to adopt an amortization policy?
- If the answer to question (ii) is affirmative, what should be the useful life of the asset?
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